An introduction to lean principles that can be applied to service industries.

1. Lean Principles
Lean Principles
People
Process
Performance

2. Lean Principles
Session Plan:
What is lean?
How does lean work?
Who is lean applicable to?
5 principles of lean
The Toyota Production System
Taiichi Ohno’s 7 Wastes
7 service wastes
5 S’s

3. Lean Principles
What is lean?
Lean manufacturing was developed by the Japanese
automotive industry, with a lead from Toyota and utilising
the Toyota Production System (TPS), following the
challenge to re-build the Japanese economy after World
War II.
The concept of lean thinking was introduced to the
Western world in 1991 by the book “The Machine That
Changed the World” written by Womack, Jones, and Roos.
Lean is a philosophy that seeks to eliminate waste in all
aspects of a firm’s production activities: human relations,
vendor relations, technology, and the management of
materials and inventory.

4. Lean Principles
How does Lean work?
Considers an ‘end to end’ value stream that
delivers competitive advantage.
Seeks fast flexible flow.
Eliminates/prevents waste (Muda).
Extends the Toyota Production System
(TPS).

5. Lean Principles
Who is Lean applicable to?
Lean is historically and principally associated with
manufacturing industries but can be equally
applicable to both service and administration
processes. The next Lean movement will focus on
service industries where achieving waste elimination
is a priority.
It’s not a new phenomenon, Japanese auto
manufacturers have been developing Lean for over
50 years!

6. Lean Principles
5 principles of Lean
Value - specify what creates value from the customer’s
perspective.
The value stream – identify all the steps along the process
chain.
Flow - make the value process flow.
Pull - make only what is needed by the customer (short
term response to the customer’s rate of demand).
Perfection - strive for perfection by continually attempting
to produce exactly what the customer wants.

7. Lean Principles
Value
 Any process that the customer would be prepared to pay for that
adds value to the product.
– The customer defines the value of product in a lean supply chain.
– Value-adding activities transform the product closer to what the
customer actually wants.
– An activity that does not add value is considered to be waste.

8. Lean Principles
The value stream
The value stream is the sequence of
processes from raw material to the
customer that create value.
The value stream can include the complete
supply chain.
Value stream mapping is an integral aspect
of Lean.

9. The Value Stream
Lean Principles
“The Value Stream is those set of tasks and activities
required to design and make a family of products or
services that are undertaken with a group of linked
functions or companies from the point of customer
specification right back to the raw material source.”
(Hines et al, 2000)

10. Lean Principles
Flow
Using one piece flow by
linking of all the activities
and processes into the most
efficient combinations to
maximize value-added
content while minimizing
waste.
The waiting time of work in
progress between
processes is eliminated,
hence adding value more
quickly.

11. Lean Principles
Pull
Pull = response to the customer’s rate of
demand i.e. the actual customer demand
that drives the supply chain.
Based on a supply chain view from
downstream to upstream activities where
nothing is produced by the upstream
supplier until the downstream customer
signals a need.

12. Lean Principles
Perfection
The journey of continuous
improvement.
Producing exactly what the
customer wants, exactly when,
economically.
Perfection is an aspiration,
anything and everything is able
to be improved.

13. Lean Principles
The Cornerstone of Lean –
The Toyota Production System
Based on two
philosophies:
1. Elimination
of waste
2. Respect for
people

14. Lean Principles
Toyota Production System’s
Four Rules
1.
All work shall be highly specified as to content, sequence, timing,
and outcome.
2.
Every customer-supplier connection must be direct, and there must
be an unambiguous yes-or-no way to send requests and receive
responses.
3.
The pathway for every product and service must be simple and
direct.
4.
Any improvement must be made in accordance with the scientific
method, under the guidance of a teacher, at the lowest possible
level in the organization.

15. Lean Principles
Taiichi Ohno’s 7 Wastes (muda)
types of waste:
overproduction
waiting time
transport
process
inventory
motion
defective goods

16. Lean Principles
7 Service Wastes
Source – John Bicheno, Lean Toolbox (2003)
Delay – customers waiting for service.
Duplication – having to re-enter data, repeat details etc.
Unnecessary movement - poor ergonomics in the service
encounter.
Unclear communication – having to seek clarification,
confusion over use of product/service.
Incorrect inventory – out of stock.
Opportunity lost – to retain or win customers.
Errors – in the transaction, lost/damaged goods.

17. Lean Principles
The 5S’s
The 5S‘s are simple but effective methods to
organise the workplace.
The methodology does however, go beyond this
simple concept, and is concerned with making
orderly and standardized operations the norm, rather
than the exception.
Posters bearing the 5S terms can be found on the
walls of Japanese plants, and are a visual aid to
organisational management.

18. Lean Principles
The Japanese Origins
Seiri
Sort
• This requires the classifying of items into two categories, necessary and unnecessary,
and disregarding or removing the latter.
Seiton
Straighten
• Once Seiri has been carried out Seiton is implemented to classify by use, and arrange
items to minimise search time and effort. The items left should have a designated area,
with specified maximum levels of inventory for that area.
Seison
Shine
• Seison means cleaning the working environment. It can help in the spotting of potential
problems as well as reducing the risk of fire/injury by cleaning away the potential
causes of accidents.

19. Lean Principles
The Japanese Origins
Seiketsu
Systematise
• Seiketsu means keeping one's person clean, by such means as wearing
proper working clothes, safety glasses, gloves and shoes, as well as
maintaining a clean healthy working environment. It can also be viewed as
the continuation of the work carried out in Seiri, Seiton, and Seison.
Shitsuke
Sustain
– Shitsuke means self-discipline.
• The 5 S‘s may be viewed as a philosophy, with employees following
established and agreed upon rules at each step. By the time they arrive at
Shitsuke they will have developed the discipline to follow the 5 S‘s in their
daily work.

20. Lean Principles
Summary
Lean manufacturing was developed by the Japanese.
Lean is a philosophy that seeks to eliminate waste in all
aspects of a firm’s production activities.
Lean is principally associated with manufacturing industries
but can be also equally applicable to both service and
administration processes.
Works on 5 basic principles.
Cornerstone of Lean is the Toyota Production System.
Considers 7 Wastes (muda).
Utilises 5 S methodology.